New Zealand is claiming two Australian-built frigates are unseaworthy and refusing to accept the vessels, leaving them in limbo at the Williamstown docks.
Revelations about the dispute are embarrassing for Canberra, which has just announced a multibillion-dollar investment in naval shipbuilding as the centrepiece of a new defence white paper.
Shortcomings in the construction of the Otago and Wellington patrol vessels have also disrupted New Zealand's naval expansion, with its Defence Minister, Wayne Mapp, describing the project as "a mess".
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